Early this month, the National Kitchen & Bath Association (NKBA), in conjunction with John Burns Real Estate Consulting, released the Third Quarter Kitchen & Bath Market Index (KBMI), which shows positive growth in the remodeling industry. Scores that are above 50 indicate growth while those below show decreased activity, and the score for Q3 2019 was 65.4. This is consistent with the Q2 2019 score of 65.7.
This index looks at the “economic pulse” of the kitchen and bath industry, and it is also used to gauge larger macroeconomic conditions, such as consumer confidence and discretionary spending.
According to the study on which the index is based, the current major concerns of the industry are as follows:
- Rising cost of materials
- Customer budgets
- Fear of recession
- Labor costs
In addition, 54 percent of NKBA members have cited that tariffs have had a moderate, high or significant financial impact to their businesses, and manufacturers were hit hardest with 59 percent reporting financial impact. One in three members have had to raise prices on products and materials due to tariffs.
“The KBMI arms consumers and our nearly 50,000 industry members with the knowledge they need to best understand the remodeling market and economic climate,” said Bill Darcy, NKBA CEO. “We’re pleased to find the industry is still growing and that future conditions are optimistic. The KBMI also sheds light on industry challenges, such as the labor shortage, which we hope to support through our NextUp program by educating youth on the many career opportunities available in the kitchen and bath space.”
“Our partnership with the NKBA allows us to monitor the kitchen and bath industry, which is a valuable housing indicator for our clients,” said Todd Tomalak, Senior Vice President of Research for John Burns Real Estate Consulting. “Remodeling spending is shifting as fewer homeowners choose to move and instead improve their existing homes.”
Following are several other key takeaways from the Q3 report:
- The Q4 outlook is optimistic yet cautious. Experts forecast a KBMI score of 61.7.
- Sales growth is expected for the rest of 2019 at a rate of 3.5 percent for the full year although earlier predictions were at 4.7 percent and 5.4 percent.
- The kitchen and bath industry is stable.
- Products made in the U.S. are booming even though one third of members have had to raise prices. Another third of NKBA members have stated that they’ve been offering different products because of trade issues, which has increased sales of domestic brands. Higher-quality U.S. products are now in the same price range as entry-level imports, especially regarding quartz countertops.